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Culture War Roundup for the week of May 22, 2023

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Remember the big energy crisis that Europe was supposed to be doomed with for years to come? Yeah, it's pretty much gone. Worth pointing out two things.

First, natural gas demand has been much weaker than anticipated since China is weaker. Indeed, there is now a surplus of gas in the world market.Some people claim that "last winter we got lucky", but this doesn't explain how gas storage is at historically high levels. Germany, Europe's biggest gas consumer, has an excellent position going into the autumn.

Second, renewable energy is beating new records by the day. In Northern Europe, electricity prices are bouncing around zero and occasionally dipping below the line into negative territory.There's also a structural trend of rapidly growing renewable energy, which means that even as gas prices return to historical norms, it is unlikely that consumption will stay the same. The shift now underway to renewable and clean energy (e.g. nuclear) is permanent. Russia had its chance at energy blackmail and it turned out it was a dud.

I think there are a couple of conclusions to draw from this. The most important one is that scaremongering and hysteria rarely pays to listen to. We can broaden this to a discussion about climate change or even immigration. Sure, there will be issues, but the doomsters on both issues were proven wrong historically. So were the doomsters on Europe's supposedly "permanent energy crisis" thesis.Then why do people persist by wallowing in fear? I don't have a clear answer but perhaps there are evolutionary adaptions that were beneficial to those who were erring on the side of caution?

Another important takeaway for me is once a crisis gets going you should never underestimate humanity's capacity for adaption and change. The system we inhabit may look brittle, but it's probably a lot more sturdy than we give it credit for. Some of us still remember the panicked predictions about the food supply chains breaking down when Covid hit, and plenty people stocked up on tons of canned food, often for no good reason. Some even talked of famine.

Perhaps being the optimist just isn't socially profitable. You're taken more seriously by being a "deeply concerned" pessimist. If this is true, then social incentives will be skewed to having the bad take. People who will be aware of this will probably draw the right conclusions in times when most other folks are losing their minds in fear.

What is true is that Germany is a highly unequal society with almost no social mobility

On what do you base this? Gini index seems fine.

Germany's wealth inequality, as opposed to income inequality, is very high.

One thing I've heard about Germany and the Netherlands is that the extractive taxation and regulation makes it very difficult for a middle class person to get rich. So the wealthy are composed of heirs. (Although, to be fair, this doesn't explain why French wealth inequality appears to be low).

If we were to measure generational wealth inequality I'm certain that Germany would look awful compared to more dynamic countries like the U.S. where it's quite easy for a normal person to become moderately wealthy.

For what it's worth, when I last saw this, the gap had grown immensely in the last 10 or 15 years. It was quite surprising, as I haven't really noticed it in German society (where I live, but I'm in a rich city).

Although I think I saw income inequality. The hope would be that it's somewhat reversible, as I think (too much) inequality is bad for a society. OTOH, I pay quite a lot in taxes already, so it's not too clear to me how thing will improve. Higher minimum wage / whatever Harz-4 is called now?

High property taxes on large central city apartments would be one way to drive down wealth inequality, as that is one thing which all wealthy people want that they can't easily hide.

I'd also propose the following for inheritance taxes: The government gets 1 "share" of your inheritance. For example, if you have 1 heir, the government would get half. If you have 2 heirs, the government would get one third. With 10 heirs, they would get 1/11th. Although this proposal would possibly lower overall inheritance taxes, it would also incentive the rapid dissolution of large fortunes. Wealthy families used to have more children than now. This is one factor in increasing wealth inequality.

It's also worth pointing out that ideas to reduce inequality without reducing overall quality of life probably won't work. Wealth inequality almost always goes up except for in times of major disaster (Great Depression, WWII, Communist revolution, etc...).

What definitely doesn't work is high income and business taxes. They merely ensure that the existing elite is not challenged by upstarts, although it might narrow the gap between middle and low. When talking about inequality, it is the 0.1% that is the largest driver of distortions. They need to be challenged directly. Instead what we get is insane taxes and regulation on a small business whose owner makes $500,000/year.

While I'm not sure your exact proposal is the way, I do think inheritance taxes are both a good way to reduce inequality, and are also, honestly, democratic (even playing field). That said, they do go against human nature to give something to your kids, so I think you need to be careful. (Yes, I know trusts are a standard way to work around them; it seems like if this is known, a counter-play should be possible). I say this as someone intending to leave something (but not too much :D) to his kids.

Agreement on the expensive real estate. Also, especially anything more than a single home should be hit fairly hard, IMO.

I'd also propose the following for inheritance taxes: The government gets 1 "share" of your inheritance. For example, if you have 1 heir, the government would get half. If you have 2 heirs, the government would get one third. With 10 heirs, they would get 1/11th. Although this proposal would possibly lower overall inheritance taxes, it would also incentive the rapid dissolution of large fortunes. Wealthy families used to have more children than now. This is one factor in increasing wealth inequality.

This is an interesting idea that would also have some eugenic effects. I have often wondered how to incentivise rich people to have more children.